Demand for supply chain finance up 40 per cent

Adam Leach is a freelance business journalist
7 June 2013

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International banks have seen demand for supply chain finance services increase by up to 40 per cent in the past year and expect it to continue rising, according to research.

Forging new links, a study published by research and advisory firm Demica, reported banks have seen growth rates between 30-40 per cent for supply chain finance services they offer. It predicted demand will continue to rise but at a slower rate. It predicted 20-30 per cent growth per year by 2015, and 10 per cent growth annually by 2020.

Phillip Kerle, chief executive officer of Demica, said: “The upward growth trajectory of SCF witnessed by global banks demonstrates the growing importance of this facility in the trade finance armoury. In addition to the working capital benefits, nowadays businesses are also placing greater emphasis on operational efficiencies and cost reduction. The increased transparency and visibility in payment processes facilitated by SCF will therefore prove to be a particularly valuable asset for suppliers and corporates alike.”

This week American Express highlighted the need for companies to ensure they do not suffer negative effects from the flow of working capital. The payments company said figures showing European corporates had lost billions over the past year as a direct result of unpaid bills, it was incumbent on them to ensure suppliers are paid on time.

Last October, the UK government launched a campaign calling for UK businesses to offer SCF to suppliers. Soon after 38 of the country’s biggest companies committed, including Rolls Royce, Tesco, Land Rover and Diageo.

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